Pressure on household finances eases a touch in July

Pressure on household finances eased a little in July as the lifting of coronavirus restrictions lent some support but worries about job security grew, according to data released on Monday.

IHS Markit’s monthly household finance index - which measures households’ overall perceptions of financial wellbeing - rose to 41.5 from 40.7 in June and came in comfortably above the eight-and-a-half year low of 34.9 seen in April.

Nevertheless, it remained below the 50.0 mark and far weaker than the levels seen before the pandemic hit in March.

Markit said the phased reopening across parts of the UK economy appears to have been a factor supporting household finances, leading to a slightly improved situation for income from employment and workplace activity in comparison those recorded during the lockdown period.

However, households' financial outlook for the next 12 months deteriorated compared to June, with the index falling to 42.5 from 45.9 as people become increasingly pessimistic about job security.

The survey also showed that demand for unsecured credit fell for the first time since the survey began in February 2009.

IHS Markit director Tim Moore said: "July data illustrates that UK households continue to tighten the purse strings despite a phased reopening of the economy and return to work after the lockdown period.

"Almost four times as many survey respondents reported a decline in job security as those that saw an improvement in July. Large numbers of households are therefore maintaining the cautious spending habits adopted during the early stages of the pandemic and are now focussed on paying down debt and saving where possible."